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The Supreme Court Update - June 27, 2025

June 27, 2025

by Ian Blodger, Jessica M. Leano, and Brock Huebner

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Today, on the last day of the 2024-2025 term, the Supreme Court of the United States issued five decisions:

Trump v. CASA, Inc., No. 24A884: This case addresses whether district courts had the authority to issue nationwide injunctions barring executive officials from applying President Trump’s Executive Order No. 14160, which sets forth conditions under which a person born in the United States would not be recognized as an American citizen. The plaintiffs filed suit, alleging that the executive order violates the Fourteenth Amendment and the Nationality Act of 1940. Three district courts found the executive order was likely unlawful and entered a universal preliminary injunction barring various Executive Branch officials from applying the policy to anyone in the country. In a 6-3 decision authored by Justice Barrett (and joined by Chief Justice Roberts and Justices Thomas, Alito, Gorsuch, and Kavanaugh), the Supreme Court held that the universal injunctions likely exceed the equitable authority that Congress has given to federal courts. The Court reasoned that although the Judiciary Act of 1789 grants courts the authority to issue injunctions as part of the court’s equitable power, universal injunctions are not analogous to traditional equitable powers. The Court did not reach the issue of whether Executive Order No. 14160 was lawful. Justices Thomas, Alito, and Kavanaugh also each issued concurrences addressing particular aspects of how the Court’s opinion will work in practice. Justice Sotomayor (joined by Justices Kagan and Jackson) dissented, arguing that the executive order violates the Constitution and that universal injunctions are consistent with the long-established principles of equity applied by the Court. Justice Jackson issued a separate dissent to argue that the Court’s decision would “permit the Executive to violate the Constitution with respect to anyone who has not yet sued” and that this “is an existential threat to the rule of law.”

View the Court's decision. 

Kennedy v. Braidwood Management, Inc., No. 24-316: This case addresses the constitutionality of the U.S. Preventive Services Task Force (“USPSTF”), which is part of the Department of Health and Human Services (“HHS”). Under the Affordable Care Act, the USPSTF’s guidelines control which preventive medications, screenings, and medical treatments that health insurance providers must provide at no cost to insured individuals. In seeking to avoid the USPSTF’s guidance related to pre-exposure prophylaxis (“PrEP”) to prevent HIV infection, a group of individuals and businesses argued the USPSTF’s members were not properly appointed, and thus their recommendations while on the USPSTF were invalid. The Fifth Circuit held that the structure and powers exercised by the USPSTF members qualified them as principal officers rather than inferior officers, and that their appointment violated the U.S. Constitution’s Appointments Clause because they were appointed by the HHS Secretary, rather than being appointed by the President and confirmed by the Senate. In a 6-3 opinion authored by Justice Kavanaugh (joined by Chief Justice Roberts, and Justices Sotomayor, Kagan, Barrett, and Jackson), the Supreme Court reversed and held that the USPSTF members are only inferior officers because their work is directed and supervised by the HHS Secretary, who has the power to remove USPSTF members at will. The Court further held that Congress properly vested the HHS Secretary with the power to appoint the USPSTF members. Justice Thomas (joined by Justices Alito and Gorsuch) dissented, arguing that the laws vesting the HHS Secretary with appointment powers did not adequately set aside the default requirement of Presidential appointment and Senate confirmation. 

View the Court's decision. 

Mahmoud et al., v. Taylor, et al., No. 24-297: This case involves a First Amendment free exercise of religion challenge to a curriculum set by the Board of Education of Montgomery County, Maryland (“Board”) that mandated elementary school students participate in LGBTQ+-inclusive instruction, involving storybooks focused on sexuality and gender. Although the Board initially permitted parents to opt out of this instruction, the Board later rescinded the opt out policy. Parents of children and other parties brought a suit challenging the Board’s no-opt-out policy and seeking a preliminary and permanent injunction prohibiting the Board from forcing their children and other students—over the objection of their parents—to read, listen to, or discuss the storybooks. The district court denied the motion for a preliminary injunction and the Fourth Circuit affirmed. In a 6-3 decision authored by Justice Alito (joined by Chief Justice Roberts, and Justices Thomas, Gorsuch, Kavanaugh, and Barrett), the Court held that parents challenging the Board’s introduction of the “LGBTQ+-inclusive” storybooks, along with its decision to withhold opt outs, are entitled to a preliminary injunction. The Court determined the parents were likely to succeed on their claim that the Board’s policies unconstitutionally burden their religious exercise because the books at issue “carry with them a very real threat of undermining the religious beliefs that the parents wish to instill in their children” and “impose upon children a set of values and beliefs that are hostile to their parents’ religious beliefs” without the opportunity for the parents to remove their children from this instruction. Justice Thomas issued a concurrence articulating additional reasons he believes the Board’s policy is unconstitutional. Justice Sotomayor (joined by Justices Kagan and Jackson) dissented, arguing that the Court adopted a new “constitutional right to avoid exposure to ‘subtle’ themes ‘contrary to religious principles’ that parents wish to instill in their children” and that this rule is contrary to the Court’s precedent.

View the Court's decision.

Free Speech Coalition, Inc. v. Paxton, No. 23-1122: This case concerns Texas H.B. 1181, a state law that requires pornographic websites to verify the age of their users. Representatives of the pornography industry argued H.B. 1181 violated the First Amendment’s Free Speech Clause because it unduly hindered adults’ ability to access the websites. The Fifth Circuit vacated a preliminary injunction against the law, allowing the law to be enforced pending judicial review, and applying rational-basis review, rather than heightened scrutiny because the law regulated and applied to minors, not adults. In a 6-3 opinion authored by Justice Thomas (joined by Chief Justice Roberts, and Justices Alito, Gorsuch, Kavanaugh, and Barrett), the Court held that H.B. 1181 was subject to intermediate scrutiny rather than rational-basis review, and determined that the law was valid because it only incidentally burdened adults’ protected speech and was adequately tailored to advance Texas’s important interest in shielding minors from sexually explicit content. Justice Kagan (joined by Justices Sotomayor and Jackson) dissented, arguing that Supreme Court precedent required the application of strict scrutiny because the law regulates speech that is constitutionally protected for adults, even if the same speech can be regulated for minors. 

View the Court's decision. 

Federal Communications Commission v. Consumers’ Research, No. 24-354: This case addresses whether the FCC’s universal-service scheme violates the Constitution’s nondelegation doctrine. Carriers providing interstate telecommunications services must contribute to a fund the FCC uses to pay for universal-service subsidy programs, with the contribution calculated using a “contribution factor,” a formula devised by the FCC. The FCC appointed a private not-for-profit corporation as the Fund’s permanent administrator. Consumers’ Research petitioned for review in the Fifth Circuit, arguing the scheme violates the nondelegation doctrine. The en banc court granted the petition, finding unconstitutional “double-layered delegation.” In a 6-3 opinion by Justice Kagan, the Court reversed the Fifth Circuit, holding that the scheme does not violate the nondelegation doctrine. To distinguish between permissible and impermissible delegation, the Court asks whether Congress has set out an “intelligible principle” to guide what it has given the agency to do. Under the usual intelligible-principle test, this scheme clears the nondelegation bar because Congress directs the FCC to collect contributions “sufficient” to support universal-service programs, which sets a floor and a ceiling. The use of the administrator is permissible under the private nondelegation doctrine because the administrator is broadly subordinate to the FCC, and the FCC’s authority and oversight extend to determining the contribution factor. As to so-called “double-layered” delegation, a law violates the traditional nondelegation doctrine when it authorizes an agency to legislate and violates the private nondelegation doctrine when it allows non-governmental entities to govern. But a measure implicating (but not violating) one does not compound a measure implicating (but not violating) the other in a way that pushes the combination over a constitutional line. Justices Jackson and Kavanaugh filed concurrences. Justice Gorsuch filed a dissent, joined by Justices Thomas and Alito. 

View the Court's decision. 

Yesterday, the Court issued four additional decisions:

Medina v. Planned Parenthood South Atlantic, No. 23-1275: This case addresses whether individual Medicaid beneficiaries may sue state officials under 42 U.S.C. § 1983 for failing to satisfy particular conditions for the receipt of federal funding. The dispute arises from South Carolina’s July 2018 determination that Planned Parenthood could no longer participate in its state Medicaid program, citing state law prohibiting the use of public funds for abortions. Planned Parenthood and one patient sued under Section 1983, which permits private parties to sue state actors that violate their “rights” under the federal “Constitution and laws.” Planned Parenthood argued that South Carolina’s prohibition on its participation violated a federal statute defining conditions required for the state Medicaid program to receive federal funding, specifically 42 U.S.C. § 1396a(a)(23)(A), known as the “any-qualified-provider” provision, which requires states to ensure that “any individual eligible for medical assistance . . . may obtain” it “from any [provider] qualified to perform the service . . . who undertakes to provide” it. The district court granted summary judgment for the plaintiffs, and the Fourth Circuit affirmed. In a 6-3 decision authored by Justice Gorsuch (joined by Chief Justice Roberts, and Justices Thomas, Alito, Kavanaugh, and Barrett), the Supreme Court reversed, holding that Section 1396a(a)(23)(A) does not clearly and unambiguously confer individual rights enforceable under Section 1983. The Court noted that spending-power statutes, like the one at issue here, are unlikely to confer enforceable rights and that Section 1396a(a)(23)(A) lacks the required clear rights-creating language. Justice Thomas concurred to articulate his view on the appropriate scope of Section 1983 claims. Justice Jackson dissented (joined by Justices Sotomayor and Kagan), arguing that the text of Section 1396a(a)(23)(A) used rights-creating language, and should be enforceable through a Section 1983 suit.

View the Court's decision.

Gutierrez v. Saenz, No. 23-7809: This case involves a Texas state law that allows DNA testing when a “convicted person establishes by a preponderance of the evidence” that he “would not have been convicted if exculpatory results had been obtained through DNA testing.” Tex. Code. Crim. Proc. Ann., Art. 64.03(a)(2)(B). After Ruben Gutierrez was convicted of capital murder, he twice requested DNA testing in Texas state court, arguing that the results would show he was not at the victim’s home at the time of the murder. Texas state courts declined both requests, determining that DNA testing was not required under the law because the results would only address whether Gutierrez was wrongfully sentenced to death, not whether he was also innocent of the underlying robbery that resulted in the victim’s death. Gutierrez sued in federal court under 42 U.S.C. § 1983, arguing the Texas state procedures violate the U.S. Constitution’s Due Process Clause because they deprive prisoners of the ability to support habeas corpus petitions with DNA testing evidence. Gutierrez specifically sued the district attorney who had custody of the untested evidence. The Fifth Circuit dismissed the lawsuit for lack of Article III standing, determining Gutierrez’s asserted injury was not redressable because a federal court’s declaratory judgment would not cause the state prosecutor to “reverse course and allow testing.” In a 6-3 opinion authored by Justice Sotomayor (joined in full by Chief Justice Roberts and Justices Kagan, Kavanaugh, and Jackson; and in part by Justice Barrett), the Supreme Court reversed and held that Gutierrez had standing to bring his Section 1983 claim against the custodian of the untested evidence, reasoning that the outcome was compelled by the Court’s Reed v. Goertz, 598 U.S. 230 (2023) precedent. Justice Thomas authored a dissent questioning the Supreme Court’s role intervening in state capital punishment procedures. Justice Alito (joined by Justices Thomas and Gorsuch) separately dissented, arguing the majority misapplied the Reed precedent.

View the Court's decision.

Hewitt v. United States, No. 23-1002; Duffey v. United States, No. 23-1150: These consolidated cases clarify the retroactivity of the First Step Act of 2018’s elimination of mandatory minimum penalties for certain firearm offenses, a provision which is applicable to all sentences that have “not been imposed” as of the date of the First Step Act’s enactment. In these cases, defendants were originally sentenced before the First Step Act’s enactment, but the original sentences were judicially vacated and the defendants were resentenced to new terms of imprisonment after the First Step Act’s enactment. In a 5-4 decision authored by Justice Jackson (joined in full by Justices Sotomayor and Kagan, and in part by Chief Justice Roberts and Justice Gorsuch), the Court held that in these circumstances, the First Step Act’s sentencing provisions apply. In reaching this holding, the Court relied on the present-perfect tense of the sentencing statute at issue and the principles of judicial vacatur, which presume that vacated judicial orders are void ab initio. Justice Alito filed a dissent and was joined by Justices Thomas, Kavanaugh, and Barrett.

View the Court's decision. 

Riley v. Bondi, No. 23-1270: This case addresses the 30-day window for an alien to seek judicial review of a “final order of removal” under 8 U.S.C. § 1252(b)(1). Pierre Riley entered the U.S. in 1995 on a tourist visa but did not depart when the visa expired. Riley was convicted and sentenced for drug-trafficking crimes. After he was granted compassionate release, immigration authorities took Riley into custody and issued a “final administrative review order” (“FARO”) ordering his deportation to his home country of Jamaica, placing him in on a streamlined track based on his aggravated felony conviction. Riley did not contest his removal but resisted returning to Jamaica under the Convention Against Torture (“CAT”). At a withholding-only proceeding, an Immigration Judge (“IJ”) granted Riley deferral of removal to Jamaica under the CAT. The Board of Immigration Appeals (“BIA”) vacated the IJ’s order and allowed the FARO to be enforced. Riley filed a petition for review of the BIA’s decision in the Fourth Circuit, which dismissed the petition, holding that the “final order of removal” was the FARO, not the order denying CAT relief, and it could not review the BIA’s decision because the 30-day deadline in Section 1252(b)(1) is jurisdictional and Riley’s petition was untimely. In a 5-4 opinion by Justice Alito, the Court vacated the Fourth Circuit. The majority agreed that under a straightforward reading of the statute, the FARO was Riley’s “final order of removal.” The FARO found Riley “deportable” and ordered his deportation. However, the majority rejected that the 30-day window is jurisdictional, finding it a claims-processing rule that can be waived or forfeited. Section 1252(b)(1) tells what to do to obtain judicial review but provides no directives to courts and does not reference jurisdiction. The statute’s placement also suggests it is not jurisdictional because neither the particular subsection nor the broader section concerns jurisdiction. Justice Thomas filed a concurrence. Justice Sotomayor filed an opinion concurring with the majority on jurisdiction but dissenting in part, joined in full by Justices Kagan and Jackson and in part by Justice Gorsuch.

View the Court's decision.

Firm Highlights

Insights

The Supreme Court Update - October 8, 2026

On September 29, 2026, the Supreme Court granted certiorari in one case: Department of Homeland Security v. D.V.D., No. 26-426: This case concerns the Trump Administration’s “third-country removal” procedures, where immigrants are deported to countries not listed in the removal orders. In granting certiorari, the Court granted the Government’s application to stay a lower court decision halting the practice, which will allow third-country removals to continue pending resolution of the case. The issues presented are: (1) Whether the district court had jurisdiction over respondents’ claims; (2) whether the district court had authority to enter class-wide declaratory relief and APA vacatur under 8 U.S.C. § 1252(f)(1); (3) whether the Government’s guidance on third-country removals is unlawful under 8 U.S.C. § 1231(b), the due process clause, or FARRA/CAT and its implementing regulations; and (4) such other questions that the Government determines are appropriate for the proper disposition of the case. On October 1, 2026, the Court granted certiorari in three additional cases: Rhoney v. Barbosa da Cunha, No. 26-104: Immigration officials detained Ricardo Aparecido Barbosa da Cunha—a Brazilian citizen who had lived in the United States for approximately twenty years after entering without inspection—and denied him a bond hearing under 8 U.S.C. § 1225(b)(2)(A). The Second Circuit held that his detention was instead governed by § 1226(a), which permits release on bond, because § 1225(b)(2)(A)’s mandatory-detention requirement applies only to noncitizens apprehended while entering the country or shortly thereafter. The question presented is: Whether 8 U.S.C. § 1225(b)(2)(A) mandates the detention pending removal proceedings of aliens who, like Barbosa da Cunha, are present in the United States without having been admitted. Missionaries of St. John the Baptist, Inc. v. Frederic, No. 25-113: A Catholic religious organization sought to build a shrine to the Virgin Mary on land the organization owned adjacent to its church in Park Hills, Kentucky. Local zoning restrictions prohibited the proposed construction. The question presented is: Whether a land-use regulation that prohibits a religious institution from building a religious structure on its own property constitutes a “substantial burden” on religious exercise under the Substantial Burden Provision of the Religious Land Use and Institutionalized Persons Act, 42 U.S.C. § 2000cc(a). Marschner v. Marschner, No. 25-1349: Under the Uniformed Services Former Spouses’ Protection Act (“USFSPA”), a veteran’s longevity-based retirement pay can be divided in a divorce, but retirement pay based on disability and retirement pay that was waived to receive disability pay are indivisible. The question presented is: Does the USFSPA require state courts to refuse enforcement of indemnification provisions in a divorce settlement agreement?

Insights

SEC Proposes Expansion of Investment Adviser Performance-Based Compensation Rule

On September 30, 2026, the Securities and Exchange Commission (the “SEC”) proposed amendments to Rule 205-3 under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), which provides an exemption from the general prohibition under Section 205(a)(1) of the Advisers Act on registered investment advisers receiving performance-based compensation (the “Proposal”) so long as performance-based compensation is limited to “qualified clients”.1 Most notably for private fund sponsors, the Proposal would expand the definition of “qualified client” to include any investors that satisfy the “accredited investor” definition under Regulation D. The Proposal may also have implications for private fund managers that rely on exemptions from investment adviser registration under state law because certain state-level investment adviser registration exemptions incorporate or otherwise reference the federal qualified client definition. Expansion of the Qualified Client Definition Under the current Rule 205-3, an investor generally may qualify as a qualified client if, among other alternatives, the investor has at least $1.4 million under management with the adviser or has a net worth exceeding $2.7 million. These thresholds are higher than the financial thresholds applicable to many accredited investors under Regulation D. As a result, an investor may currently qualify as an accredited investor for purposes of investing in a private offering without qualifying as a qualified client for purposes of paying performance-based compensation. The Proposal would expand the qualified client definition to include any natural person or legal entity investor that satisfies the accredited investor definition under Regulation D. The Proposal would also remove the assets under management and net worth thresholds under the current Rule 205-3 qualified client test. For private funds relying on Section 3(c)(1) of the Investment Company Act of 1940, this change could reduce the need to apply a separate qualified client standard to investors that already qualify as accredited investors. Dorsey Observations and Next Steps If adopted as proposed, the expanded qualified client definition could be particularly significant for private fund managers. Most private fund offerings are already limited to accredited investors under Regulation D. However, the Proposal could expand the pool of prospective investors available to emerging private fund managers while reducing the regulatory burden associated with complying with Rule 205-3. The Proposal could also benefit advisers operating below the SEC registration threshold that rely on a state private fund adviser exemption. A number of states have adopted exemptions modeled on the North American Securities Administrators Association (“NASAA”) private fund adviser exemption, which may condition relief for advisers to certain funds relying on Section 3(c)(1) on each beneficial owner satisfying the federal qualified client definition. However, state requirements vary, and any effect of the Proposal would depend on the text of the applicable state exemption and how it incorporates Rule 205-3. Many emerging private fund managers may have a larger network of accredited investor relationships than qualified client relationships during the early stages of their investment advisory business. Currently, under Rule 205-3, private fund managers may receive performance-based compensation from investors who do not satisfy the qualified client definition if those investors were admitted to their private funds prior to registration with the SEC. Following registration with the SEC, however, managers may continue to permit investors that are not qualified clients to invest in future private funds but may not receive performance-based compensation from those investors with respect to such investments. In addition, because the net worth and assets under management thresholds for qualified client status are adjusted for inflation every five years, the pool of qualified client investors may diminish over time as previously eligible investors no longer satisfy the applicable thresholds. The Proposal could provide the dual benefit of greater flexibility for private fund managers to establish and maintain relationships with accredited investors as their businesses scale and they become registered with the SEC, and greater flexibility for certain accredited investors to participate in investment strategies that historically have been restricted to much larger institutional investors. Unless and until the Proposal is adopted, investment advisers should continue to comply with the existing qualified client requirements. If the Proposal is adopted, private fund sponsors should consider whether corresponding changes are appropriate for their subscription documents, investor questionnaires, and other offering materials. Advisers that are state-registered or rely on a state-level exemption should also consult the laws and regulations of each relevant jurisdiction before changing investor eligibility standards or performance-based compensation practices, because adoption of the federal amendments may not automatically modify state requirements. Comments on the Proposal will be due 60 days after publication in the Federal Register. 1 Investment Adviser Performance-Based Compensation Modernization, Investment Advisers Act Release No. IA-7022 (Sept. 30, 2026), available at https://www.sec.gov/rules-regulations/2026/09/s7-2026-28#33-11443proposed.

Insights

Energy Law: Month in Review - September 2026

Welcome to Dorsey’s Energy Law: Month in Review. We provide this update to our clients to identify significant developments in the previous month. Please reach out to any of the authors, listed above, to discuss these issues. Regulatory Developments Massachusetts Ratchets Up State and Local Regulation of AI Data Centers In early September, Governor Maura Healey of Massachusetts signed an executive order requiring that artificial intelligence data centers secure the approval of local communities as a precondition to proceeding with a given project. According to the terms of the order, data center developers will need to secure a “community benefits agreement” as a precondition to receiving permits from numerous state agencies, including the Department of Environmental Protection, the Energy Facilities Siting Board, and the Massachusetts Environmental Policy Act Office. Beyond requiring community benefits agreements, the order also mandates that developers mitigate utility costs to consumers, prohibits the use of nondisclosure agreements, and requires various state agencies to develop measures to limit data center impacts on the environment. North Carolina Regulators Decline Approval of Duke Energy Gas Turbine On September 18, 2026, North Carolina Utilities Commission (NCUC) denied Duke Energy’s application for a certificate of public convenience and necessity required to construct a gas-fueled combustion turbine at its Smith Energy Complex in North Carolina. The NCUC objected strongly to the $584 million price tag and noted that Duke appeared to be constructing the facility “based on anticipated data center customer additions.” The NCUC rejected that anticipated growth as “insufficiently reliable for the Commission to act at this point.” In rejecting Duke’s application, the NCUC also noted that Duke had signed the White House Ratepayer Protection Pledge, in which it represented that it would not shift data center costs to consumers. The NCUC observed that the record did not demonstrate how Duke “intends to adhere to its commitments under the Ratepayer Protection Pledge with regard to the Proposed Facility.” Notably, commission staff had actually supported the construction of the turbine, citing concerns about Duke’s reserve margins. The NCUC noted that it “understands the Public Staff’s expressed concerns,” but those concerns were outweighed by the NCUC’s reservations, including questions of demand. Department of Energy Approves Funds for Grid Improvement The U.S. Department of Energy (DOE) recently announced that it would fund 31 grid-improvement projects in 26 states. The funding initiative is part of the DOE’s “SPARK” initiative. The funding will include $1.9 billion in federal funding from DOE and $3.35 billion in recipient cost-sharing funding. The funds will go to projects designed to improve grid reliability and lower electricity costs. Recipients plan to reconductor over 1,500 miles of transmission lines and will deploy grid-enhancing technologies across approximately 21,000 miles. DOE stated that this initiative will make available over 23 additional gigawatts of electricity. Texas Moderates Rules Governing Data Center Interconnection The Texas Public Utility Commission adopted new regulations governing large-load interconnections. The rules impose a flat study fee of $100,000 for all proposed interconnections, which departs from the initial proposal to impose study fees using a tiered system based on project size. Additionally, the final rule eliminates the PUC’s previous proposal to impose a non-refundable interconnection fee of $50,000 per MW of contracted peak demand. The final rule also moderates the initially proposed regulations governing Electric Reliability Council of Texas (ERCOT) notifications for large-load customers’ non-utilized capacity. The proposed rules would have required notifying ERCOT within 30 days of missing a scheduled energization milestone by six months. The final rules, however, do not require informing ERCOT unless a scheduled energization milestone is missed by 24 months. FERC Denies TransAlta 202(c) Cost-Recovery Plan The Federal Energy Regulatory Commission (FERC) recently rejected TransAlta’s plan to recover $19.9 million in expenses stemming from a DOE order in which DOE prohibited TransAlta from retiring its coal-powered Centralia power plant. TransAlta had previously intended to retire the facility at the end of 2025. TransAlta’s cost recovery plan proposed spending an additional $23 million on repairs to continue operating the unit. FERC’s main objection had to do with geographic scope. TransAlta’s recovery plan called for recovering costs from California Independent System Operator (CAISO) and the Southwest Power Pool (SPP), but the DOE’s order requiring operation of the plant was designed to ensure reliability in the Northwest assessment area (Montana, Oregon, Washington, and parts of northern California and northern Idaho). Accordingly, FERC was unwilling to allow cost recovery from CAISO and SPP when the order that precipitated the additional costs only related to the Northwest assessment area. FERC informed TransAlta that it would only approve cost recovery from load-serving entities in the Northwest assessment area. FERC’s decision comes amid a rush of DOE emergency orders requiring the continued operation of coal-fired generating units. Litigation Appeals Court Upholds Washington Hydropower Plant With Caveats In a September 21, 2026, opinion, the Washington Court of Appeals largely upheld a Clean Water Act water quality certification by the Washington Department of Ecology for the Goldendale Energy Storage Project, a proposed pumped-water storage hydropower system adjacent to, but off-stream from, the Columbia River. A nonprofit (Columbia Riverkeeper) and the Confederated Tribes and Bands of the Yakama Nation appealed the certification, contending that it failed to impose necessary conditions and monitoring requirements to protect the water quality of the Columbia River. Most saliently, the plaintiffs argued that the project had the potential to leak 100 acre-feet of water per year into tributaries of the Columbia River. The Court of Appeals broadly rejected plaintiffs’ challenge to the state’s conclusion that “the project was designed not to leak.” That said, the Court of Appeals did reverse on one narrow issue. Specifically, the court determined that the state’s conclusion that “leakage from the project’s tunnels would be monitored and reported” was not supported by the evidence because the certification “does not explicitly require monitoring and reporting to determine whether there is any leakage.” Accordingly, the court remanded the matter to the state to impose monitoring and reporting requirements but otherwise affirmed the certification. Legislative Developments California Legislates Restrictions on Data Center Energy Use and Grid Costs On September 21, 2026, California Governor Gavin Newsom signed seven bills broadly regulating data centers in the state. SB 1168 directed the California Public Utilities Commission to assess the energy used by data centers. It also requires the PUC to pass costs of transmission and distribution upgrades and load increases on to data centers, rather than customers. SB 886 and SB 887 compel data centers to pay for infrastructure upgrade and generation costs, and wildfire mitigation costs, in addition to imposing environmental review. The statutes additionally increase local oversight of data centers. AB 1577 imposes a monthly reporting requirement that requires data centers to supply energy consumption and efficiency data to the California Energy Commission. AB 2383 contains incentives for data centers to use onsite clean energy generation. Finally, AB 2469 and AB 2619 require data center developments to assess water supply and develop a water scarcity plan. The statutes also mandate statewide water reporting as a precondition to obtaining and renewing business licenses.

Insights

EPA Limits Title V Re-Litigation of NSR Permits

Overview On September 25, 2026, the U.S. Environmental Protection Agency (“EPA”) published a final rule that significantly limits the ability of third parties to use the Clean Air Act (“CAA”) Title V permitting process to revisit New Source Review (“NSR”) permitting decisions years after those decisions were made. The rule establishes that NSR permitting determinations generally must be challenged during the original permitting proceeding, thereby providing regulated sources with greater permitting certainty and finality for major capital projects. Published in the Federal Register titled Clarifying the Scope of “Applicable Requirements” Under State Operating Permit Programs and the Federal Operating Permit Program (Docket ID No. EPA-HQ-OAR-2023-0401), the rule amends 40 C.F.R. Parts 70 and 71 to codify EPA’s interpretation regarding when requirements established under other CAA programs may be reviewed, modified, or implemented through the Title V operating permit program. The rule becomes effective 30 days after publication. The rule addresses two principal issues: (1) the relationship between NSR preconstruction permitting and Title V operating permits, and (2) the treatment of the General Duty Clause under CAA section 112(r)(1). Most significantly, the rule provides greater certainty for sources navigating the NSR permitting process. EPA’s amendments are intended to ensure that NSR permitting decisions made through an approved public process are generally not revisited later through Title V permit proceedings. The rule responds to a circuit split between the U.S. Courts of Appeals for the Fifth and Tenth Circuits. In Environmental Integrity Project v. EPA, 969 F.3d 529 (5th Cir. 2020), the Fifth Circuit upheld EPA’s interpretation, concluding that it was consistent with the text, structure, and purpose of Title V. In contrast, the Tenth Circuit reached the opposite conclusion in Sierra Club v. EPA, 964 F.3d 882 (10th Cir. 2020), finding that the then-existing regulatory definition of “applicable requirement” did not support EPA’s position. By amending the regulatory language on which the Tenth Circuit relied and codifying the interpretation approved by the Fifth Circuit, EPA has established a nationwide framework governing the interaction between NSR and Title V. NSR and Title V: EPA Establishes a Uniform Nationwide Framework At the core of the rule is EPA’s effort to define the respective roles of NSR and Title V. The rule codifies the approach EPA has applied since 2017: once a source obtains an NSR permit under an EPA-approved permitting program, and that permit was issued following public notice with an opportunity for comment and judicial review, the permit establishes the NSR-related “applicable requirements” of the State Implementation Plan (“SIP”) or Federal Implementation Plan (“FIP”) for Title V purposes. Under this framework, Title V is not a vehicle for re-examining underlying NSR permitting decisions. EPA does not intend to use the Title V process to revisit applicability determinations, emissions calculations, control technology determinations, permit conditions, or other issues resolved through the NSR permitting process. This principle applies regardless of the stage of the Title V proceeding; whether the NSR permit was issued pursuant to a SIP or FIP; the type of NSR issue involved; or whether the NSR permit is incorporated into Title V sequentially or concurrently. Limited Exceptions EPA recognizes several circumstances in which NSR issues may still be reviewed through the Title V program: No NSR permit was issued at all; The permit was issued without public notice and an opportunity for comment and judicial review; or The issue involves substantive overlap between Title V and NSR requirements, such as the adequacy of monitoring provisions. As a result, the rule does not insulate unpermitted projects or foreclose review of matters that independently arise under Title V. Key Regulatory Amendments The rule revises the definition of “applicable requirement” in 40 C.F.R. §§ 70.2 and 71.2. Paragraph (1): Where an NSR permit is issued with public notice and an opportunity for comment and judicial review, the permit establishes and defines the applicable SIP or FIP requirements for Title V purposes. Paragraph (2): All NSR permit terms, including terms contained in minor NSR permits, constitute applicable requirements that must be incorporated into Title V permits. Paragraph (4): CAA section 112(r)(1) (the General Duty Clause) is expressly excluded from the definition of “applicable requirement,” while section 112(r)(7) Risk Management Program requirements remain included. EPA also amended 40 C.F.R. §§ 70.8 and 70.12 to clarify that alleged defects in requirements established outside the Title V process generally do not provide a basis for EPA objection to a Title V permit or for a Title V citizen petition. General Duty Clause Exclusion The rule also codifies EPA’s longstanding position that the General Duty Clause in CAA section 112(r)(1) is not an “applicable requirement” for Title V purposes. EPA points to several considerations supporting that conclusion, including the distinction between the General Duty Clause and Title V permit terms, the provision’s origins in the Occupational Safety and Health Act’s general duty clause, and the different enforcement structures applicable to the General Duty Clause and Title V permit requirements. Importantly, excluding section 112(r)(1) from the definition of “applicable requirement” does not eliminate EPA’s authority to enforce the General Duty Clause independently of the Title V program. The final rule instead clarifies that the General Duty Clause need not—and should not—be incorporated into Title V permits as an applicable requirement. Practical Implications for Regulated Sources Greater Finality for NSR Permits  For projects requiring PSD, nonattainment NSR, or minor NSR permits, the permitting process becomes the primary forum for resolving disputes regarding applicability determinations, emissions calculations, control technology requirements, offsets, and permit conditions. Once an NSR permit is issued through a qualifying public process, regulated sources should face substantially reduced risk that those same issues will be challenged years later through Title V permit proceedings. Reduced Risk of Collateral Permit Challenges Stakeholders have sometimes sought to use Title V permit issuance, renewal, revision, or citizen-petition proceedings to challenge underlying NSR determinations. The final rule makes clear that Title V is not the appropriate vehicle for challenging whether an applicable requirement was correctly established in the first instance. This should reduce the risk of permit delays and uncertainty associated with collateral challenges to previously issued NSR permits. The rule does not, however, eliminate all Title V challenges relating to an NSR permit. Challenges concerning the Title V permit itself—including whether it appropriately incorporates applicable requirements or contains adequate compliance provisions—remain possible. Increased Importance of the Initial NSR Proceeding Because Title V generally will not provide a second opportunity to challenge the substantive validity of an NSR determination, the administrative record developed during the NSR process becomes increasingly important. Permit applicants should ensure that applicability analyses, emissions calculations, control technology evaluations, modeling demonstrations, and supporting technical documentation are thoroughly developed during the original permitting proceeding. For significant projects, applicants may therefore have an additional incentive to identify and resolve potential permitting issues before the NSR permit is issued rather than assuming that unresolved issues can be addressed during a subsequent Title V proceeding. Potential Incentive for Broader Public Participation EPA also notes that permitting authorities may choose to provide public notice and an opportunity for comment for a broader range of NSR permits because permits issued through a qualifying public process receive the benefit of the finality framework established by the rule. Some permitting authorities may conclude that greater public participation at the NSR stage is preferable to uncertainty during subsequent Title V proceedings. Conclusion The final rule is principally a permitting-certainty measure. For sources that obtain NSR permits through a public process, EPA has substantially limited the ability of third parties to revisit underlying NSR determinations through the Title V program. As a result, regulated entities should benefit from greater finality regarding key permitting decisions, reduced risk of collateral permit challenges, and increased certainty when planning and implementing capital projects.